The wild east is still with us, if the actors in a dramatic new court battle in Moscow are to be believed. While Mikhail Khodorkovsky, the Russian oil billionaire dramatically arrested in September, continues to fight corruption charges, a separate legal dispute is brewing which could prove just as worrisome for western investors.

The case involves Mikhail Fridman, another of Russia's controversial 'oligarchs' - though one on slightly friendlier terms with the Kremlin than Khodorkovsky. At stake could be the validity of numerous shareholder agreements guaranteeing the rights of foreign investors in Russian companies.

Fridman's Alfa conglomerate is locked in a row with an obscure Bermudan investment fund over who owns a 25 per cent stake in MegaFon, Russia's third-largest mobile phone operator. Both claim the stake is their property, and both claim the other is using underhand means to get their hands on it.

Ever since Khodorkovsky, who owns a third of Yukos, Russia's biggest oil company, was detained on charges of fraud and embezzlement, corporate governance has been a major issue in Russia. Voters go to the polls in parliamentary elections this weekend, so it's not the best time for Alfa and IPOC, the Bermudan fund, to be blackening each others' names.

MegaFon is a big company, long earmarked by its management for a £1 billion flotation in London and part-owned by, among others, the Norwegian telecoms giant TeliaSolera. Writs are flying in half a dozen jurisdictions around the world, and the increasingly fraught row could be a blow to Russia's fragile investment climate.

The fact that Fridman is involved probably doesn't help. He was one of those accused by BP of illegally appropriating assets belonging to Sidanco, a Russian firm in which the British oil group had invested. He denied the allegation and the dispute was later resolved, and BP has since invested $7bn in a joint venture with Fridman's TNK. But the new legal battle could revive bad memories.

IPOC claims it agreed to buy 25 per cent of MegaFon from Russian-based investor LV Finance in 2001, and has since handed over around $74m in transfers and loans towards the purchase. But Alfa, it is alleged, bought LV Finance in August, and transferred the stake into its own portfolio. Alfa challenges this version of events, insisting it is the rightful owner of the shareholding.

Already there have been legal skirmishes in Bermuda, the Bahamas, Rotterdam and elsewhere. In the British Virgin Islands, IPOC secured a court order appointing receivers to take control of Alfa's assets in the jurisdiction. Who owns what will only be fully decided at an international arbitration in Switzerland, which starts this month but could take years.

Nor is ownership the only issue. Under MegaFon's shareholder agreement, Alfa is prevented from taking control of the 25 per cent stake because it has a significant investment in Vimpelcom, one of the company's industry competitors. Alfa is trying to overturn the shareholder agreement in a Moscow court, arguing that since it is governed by Swedish law it should be rendered null and void in Russia.

If the court accepts this argument, says IPOC's general manager Roland Bopp, it will leave all international investors in Russia without proper legal protection. 'We believe the integrity of contracts with Russian companies is at stake,' Bopp said.

It has been suggested that BP's joint venture with TNK, for example, is governed by British law and could be challenged in the same way.

But sources close to Alfa deny the case will set a dangerous precedent.

'Alfa believes it has a very good claim that this shareholder agreement breaches Russian law, but there are lots of things about this dispute that aren't going to be applicable anywhere else.'

Meanwhile, Alfa has ac cused IPOC of a lack of transparency. The Bermudan fund claims it is an international investor in the telecoms and media sector but has not released many details about its customers or the 'several hundred million dollars' of investments it claims to have under management. But it held a 6.5 per cent stake in MegaFon before the current dispute, and provided the mobile company with start-up capital.

Aspersions have also been cast on some IPOC executives. Its co-founder Jeff Galmond used to advise Telecominvest, another major player in the sector, but Bopp denies the firm has any relationship either with Telecominvest or with its former president Leonid Reiman, who is now Russia's Telecoms Minister.

More damaging was the revelation in October that Vidya Sharma, a former Merrill Lynch banker and IPOC's former president, had a conviction for fraud. Bopp says IPOC had been unaware of the conviction and that Sharma left the firm on the day it emerged.

The big court cases haven't even begun yet, and already the two sides are almost accusing each other of criminal conduct. Meanwhile, MegaFon, which already has 6 million subscribers, is in limbo. Nasty and entertaining as the dispute promises to be, most international investors are unlikely to be impressed.